IRS Issues Notice on Foreign Subsidiary Taxable Year Change (1)

The IRS announced Tuesday it intends to issue proposed regulations on the 2025 GOP tax law’s elimination of a rule that allowed certain foreign subsidiaries of US companies to elect their tax year.

Notice 2025-72 previews proposed regulations the agency will put out to clarify how companies can allocate their foreign taxes after the 2025 law eliminated the “one-month deferral rule” under Section 898(c) of the tax code.

Prior to the new law’s enactment, controlled foreign corporations, or CFCs, were able to elect a taxable year that begins one month before their US’s parent’s tax year. Controlled foreign corporations are ...